How California's New Marijuana Laws Will Affect San Diego Pot Businesses
Our top story on Midday Edition medical marijuana distribution in California will be overhauled by a series of bills signed last week it Governor Jerry Brown. The new laws will regulate how Mayor Ron is grown, transported, and sold in California. Advocates are saying is about time. The safest clarify aspects of the marijuana law which have remained murky for the past 19 years. But many say the real driving force behind this legislation is the prospect of a voter approved initiatives next year legalizing recreational marijuana. Joining me is Jessica McElfresh an attorney with McElfresh Law. Welcome to the program. Glad to be here, ring. Lance Rogers is awful here he is with Bremer,Whyte, Brown, & O'Meara LLP. First of all, you both represent clients who been involved in the sale of medical marijuana. Jessica got have your clients mainly been involved in dispensaries? As is typical of this practice, my clients have been involved with the establishment of dispensaries, delivery services, cultivation of marijuana, making various products. Basically running the gamut of the industry. And Lance, is that the case with you as well. Yes. I will get back to help her longer answer Lance. [ Laughter ] Four years got Jessica, state legislatures have not set down the regulations on the sale and distribution of medical marijuana. What kind of problems as that caused? Would have left it to every local government, if they want to enact regulations to try to figure out how. It has created a great deal of confusion between law enforcement and within our state criminal justice system when people are arrested, whether they should be arrested, what are the elements of defense. It has created a great deal of insecurity in terms of qualified patient seeking to get the medicine if they cannot cultivate for themselves. Confusion with what the various rights are and just basically nonstop confusion everywhere you look. Cities and counties have been left to their own devices to determine how marijuana should be regulated wrecks backup they have been left to their own devices. There have been no statewide recommendations, licensing, nothing of that sort. It has basically fallen on local governments to try to fashion not only the standard systems, such as zoning and local permitting, but how do we regulate this? How do we track this? How do we assess people's viability to be a licensed operator? That is a lot more than is normally shifted on a local government. Now Lance, as you see it, what will the new regulations due to firm up the state's policy on medical marijuana? These new regulations are really terrific. Our firm is the largest marijuana practicing law for the United States. California is the best market for this industry. We had the largest medical marijuana patient base and the best product in my opinion. As Jessica was saying, there has been a great industry that has been here for 19 years and what we are seeing is finally statewide licensing similar to Colorado and Washington. The states that really give clear guidance to companies. Lance, what do you think about the establishment of this new Bureau of medical marijuana regulation? I think is terrific. The regulation of Canada's is a unique product to regulate. Having a specific government agency which is tasked with just this one product, is being advisable by industry professionals, law enforcement, I think it will have a keen eye for the unique issues of this product. Now Jessica, San Diego has just recently permitted its first legal medical marijuana dispensaries. When the new state regulations go into effect, both these dispensaries need to get state permits? Eventually they will. The medical marijuana regulatory safety act is not set forth exactly when the state will begin accepting state application licenses. We suspect 2018. In the interim period, the fortunate facilities throughout the state of California that have local permits, will be allowed to continue operating. They will also be allowed to continue operating while licensing is going on. But yes, they will. However, given the vast amount of emphasis in the statewide bills on local involvement in local regulation and local approval, one would expect that if an entity is operating with local approval and conditional approval, that they would be likely to receive a statewide license. How else will the new laws and a new state Bureau, how else will that regulate San Diego's dispensaries? We are hoping it will just regulate storefront dispensaries in San Diego. We're hoping that the various local governments will be encouraged to buy -- by these new state laws and begin to license cultivation, making product such as edibles or topicals or other concentrates that provide a great deal of relief to various qualified patients. And also look at some of the other types of licensing such as transportation and distribution. I guess what I am going for here, do you envision a time when state inspectors might come around and check out the dispensaries of San Diego and had a more or less checklist of things that this dispensaries need to be doing and whether or not they are doing them? That is absolutely going to occur. Is not sure how much is going to be delegated down to local authorities versus Sacramento coming down. That is what we envision and it is very welcome day. We had been waiting to this for several years. We don't always have the clearest of answers to give your client. I want to go back to what Jessica mentioned, Lance. Some of the very great areas of the medical marijuana law as we have come to know in California in the years. It is the cultivation and transport of the drug. Can you tell some of the problems that people have had in trying to cultivate and transport legal local marijuana in the state of California? Absolutely. Jessica and I have been dealing with this issue for years. We stopped at this issue in the sand -- city of San Diego. I represented the first century in San Diego but there's still no provision in the San Diego municipal code as where the should be grown and how to be transported to the dispensaries. Anyone who is growing right now and transporting it to a licensed dispensary is still subject to criminal penalties. A felony, potential jail time, and so there has to be a better solution for how this lawful product arrives in these legal Spencer race. What is the solution under these new laws? Under the new laws, the cultivation will be licensed through the Department of Agriculture. This is a historic change. When the governor signed this bill into law on Friday, for the first time this is recognized as agriculture. It will be regulating for different sites cultivation facilities throughout the state of California all this regulation will require local permitting. Right now there's not a lot of local licensing for cultivation. Only a few areas actually proactively license for commercial cultivation of cannabis versus cultivation for personal use. The product will then be transported to a testing facility by a licensed transporter. All of the products on the market will be required to be tested. It will then be transported by a licensed transporter to a manufacturing facility. It will then be transported to the end user at the retail location. Every step of the process is going to be regulated and at the end of the day, this is good for medical marijuana patients in the state. One fundamental change, it's got go marijuana can now be a for-profit business. That do not use to be the case in California. That must bring investors into the picture. Yes. That's absolutely right. Our firm has been inundated with calls from outside investors and accredited investors that are interested in investing in this new legal industry. It's nice to have this conversation, but cannabis remains illegal under federal law. That brings up unique challenges and important disclosure requirements in terms of investing into these companies. In any event, you are the word, this is the next.com around a lot with a lot of investors coming from Silicon Valley bleeding that this is the next great American industry. How big of a business DC this becoming? And I'm talking specifically about medical marijuana. It is hard to put a number. But this is a billion-dollar industry. Jessica, will it be taxed? It is currently taxed. That's one thing we point out. Entities have been collecting sales tax and turning it over to the state board of equalization every sale or taxable transaction. That has been having for a long time. Yes, there will not only continue to be the sales tax, there is the availability for local areas to add taxes and categories. I guess it could take form of excise these contacts these, licensing fees. There's this great deal for the states reimburse itself regulation and raise revenue. We do hope that many qualified patients are on a limited income because they're dealing with serious illnesses we would hope that as rulemaking was slower, the state by the way to perhaps adjust the taxation relative to qualified patients income Apparently most law enforcement agencies in California have supported the new regulations. You think that is? One, I think things have gone well in other states has alleviated some of law enforcement's concerns. Two, we have to remember that 1996, while wasn't that long ago, it was about 20 years. That's enough time for people to want to become more used to marijuana, to really size desk to realize qualified patients are, for research and to policy research. There has been a generational or a thought shift regarding medical marijuana. As let's mentioned, it is something that can be regulated by our Department of Agriculture as something to be regulated by our Department of Health for testing for potency. It is no longer a simple law enforcement issue. It has moved into a regulated industry will be happening over the next several years. This will not happen magically. The Bureau goes into effect in 2018. Is that right? The Bureau is set up in various departments to begin working on regulations when these laws go into its affect on 2016. We are expecting various licenses to be accepted and decided upon in 2018. I understand. Now Lance, many of the same regulations were part of recommendations made by a task force run by Lieutenant Governor Gavin Newsom, but that task force was aimed at preparing for the possible legalization of recreational marijuana. Do you think that's the driving force behind these new laws? It's hard to tell. But I think to answer your question, we certainly want to get a handle on the medical industry before we have to deal with recreational or adult use. I think there's a fair argument that the state finally said, we need to deal with the industry that is in front of us right now. In order to at least get a track record and prepare for recreational legalization in the future. I want to get your take on that as well Jessica? Do you think that's the driving force after 19 years that we have these very thought how comprehensive regulations? There's no question in my mind that that was a substantial factor you can talk with various staffers and they will admit they see the ballot initiatives for recreational marijuana coming. It seemed best that we try to resemble Colorado and said Washington. The difference being more of having a statewide system in place for medical marijuana back in the grafted upon. But let's make no mistake about this, this was a long time coming. Various government seven struggling for this for years, and regulatory bill has been introduced in the legislature for every year for many years. One has never gone through before. Another aspect, this is going well. It's going well in other states. It made it seem more attainable. There is far too long been an idea that California is too big and too out of control and we took too long. No, it is not. Now it is time. And we're going to move forward with it. Lance got you brought up the fact that in the marijuana is still illegal under federal law, DVDs clear regulations will make it less likely that the federal government will prosecute medical marijuana cases ex- I am hopeful that, yes, what we focus on our our published memoranda from the federal Department of Justice in which the federal government has indicated a nonenforcement policy as to those individuals or entities in compliance with state or local law. That has been a real challenge in the state of California over the years. Because as we lived in this gray or 50 shades of gray industry, it's really left our companies and citizens in patients throughout the state exposed to federal law enforcement because it has been difficult to say that I am complying with California law when it was unclear what California law was. Jessica the most fundamental question in all this, how do you think the new policies will help people who use marijuana for medical reasons? I hope it will help them by encouraging local governments throughout the state of California including here in San Diego County to license not only storefront dispensaries, but also cultivation, making products, there is a mechanism within the statewide bills that says basically, local governments may allow one of these uses conditionally, just make notification and they will consider it when issuing state licenses. They have encouraged them also with the ability to levy taxes. The state legislature with this bill has bent over backwards to encourage local governments to allow for more safe and affordable access at this point, the bird industrially bounce back to the local governments. But now they will have much more of a state behind them as rules are made and they can draw upon these regulations. I want to thank you both. I've been talking to San Diego attorneys Jessica McElfresh and length.
Nearly a year before advocates push for a recreational marijuana ballot measure, Gov. Jerry Brown signed off on a series of bills that will regulate how the plant is grown, transported and sold in California.
Medical marijuana has been legal in California for nearly two decades, but cities have struggled with how to regulate it. The new state law aims to standardize how cannabis is handled in the state.
The law creates a new state bureau, which will issue licenses and collect fees from pot businesses in the state. The industry will also switch from a nonprofit model, to a commercial-based one.
The new law is a relief for Jessica McElfresh, a San Diego attorney who has represented clients in the medical marijuana industry.
McElfresh said the new law has made regulations clearer.
"It created a great deal of confusion among law enforcement," McElfresh told KPBS Midday Edition on Tuesday. "It created a great deal of insecurity, in terms of qualified patients seeking their medication."
Lance Rogers, an attorney who also represents clients in the industry, said the new regulations are terrific.
"What we're seeing is finally statewide licensing that really give clear guidance to companies."
Rogers said the Department of Agriculture will now be in charge of licensing the cultivation of marijuana. The product will then be transported to a testing facility, a manufacturing facility then to a retail location.
"Every step of the process will be regulated," Rogers said.